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Review on the Feasibility of Using Trusts to Acquire Land in Cambodia

2025.07.10

Cambodia, similar to many of its neighboring countries in the Indochina region, has legal restrictions on land ownership. 
 
Cambodia recognizes the concept of private land ownership; however, under the Constitution and the Land Law, only those ‘persons with Cambodian nationality’ are permitted to own land.  A person with Cambodian nationality includes not only an individual with Cambodian citizenship but also an entity incorporated in Cambodia which Cambodian national(s) hold at least 51% of its voting shares as stipulated in the Law on Commercial Enterprises. 
 
Prior to the implementation of the Trust Law in Cambodia, a foreign investor wishing to invest in land had to consider the following methods: 
 
<table align="left" border="0" cellpadding="0" cellspacing="0" style="width: 100%; margin-top: 10px">
	<tbody>
		<tr>
			<td align="left" style="width:3%; valign:top" valign="top">1. </td>
			<td>Purchase the land under his/her own name after acquiring the Cambodian citizenship; or</td>
		</tr>
		<tr>
			<td align="left" valign="top">2. </td>
			<td>Purchase the land under the name of a local nominee, or establish a local entity with majority of its voting shares owned by Cambodian national(s) and purchase the land under the name that entity.</td>
		</tr>
	</tbody>
</table>

From the foreign investor’s perspective, these methods entail significant risks.  First method requires considerable amount of cost and time.  It may also give rise to complications if the foreign investor is from a country where dual nationality is restricted, such as Korea.  Second method has risks relating to the local partner; any breakdown in the relationship with the local partner could potentially result in the foreign investor losing control over the land.  Thus, foreign investors were in need of an alternate method for acquiring land in Cambodia. 
 
 
Framework of the Trust Law 
 
Cambodia enacted the Trust Law in 2019.  Three years later, in 2022, the Ministry of Economy and Finance promulgated implementation guidelines on the formation, functions, and management of trusts in Cambodia.  This legal framework enables foreign investors to acquire land in Cambodia by entrusting the land to a licensed local trust company as the trustee. 
 
A trust company in Cambodia requires a license from the Trust Regulator.  When a company applies for a license to the Trust Regulator, the Trust Regulator carries out an assessment on the eligibility of the applicant including its governance structure, internal control system, financial capacity and the credentials of the management.  Trust companies are subject to various ongoing reporting obligations under the Trust Law and they are supervised by the Trust Regulator.  Any violation of the Trust Law may result in legal sanctions.  As such, the foreign investors may rely on the legal protection under the Trust Law when it comes to entrusting their assets with a local trust company in Cambodia. 
 
 
Key Considerations on the Trust Transaction 
 
When acquiring land using a trust, (i) the land sales and purchase agreement should contain a provision on the entrustment of the land to a trust company; and (ii) the land title transfer documents (including the instrument called Vente Definitive) from the relevant land authorities need to be executed by the trust company (as the transferee).  This means that the foreign investor must select a local trust company and agree on the terms of the trust deed, prior to entering into the land sales and purchase agreement.  The foreign investor should seek legal counsel when reviewing the trust deed because many of the trust deed templates used by the local trust companies often lack clarity regarding the trustee’s obligations, and contain grammatical and terminological ambiguities that could potentially lead to disputes later on.  Also, the foreign investor should note that the use of entrusted assets as collateral for securing a debt remains uncertain at this point and requires clarifications from the Trust Regulator. 
 
 
Brief Outlook 
 
Several years have passed since the enactment of the Trust Law, but the downturn in the Cambodia real estate market from COVID-19 pandemic shortly after its enactment hindered the momentum in the utilization of trusts in real estate transactions.  Although the Cambodia real estate market is still in the recovery phase, we have recently noticed an increase in the number of queries relating to potential real estate investments in Cambodia.  As a viable alternative to relying on a local nominee, a foreign investor may consider using the trust services of a licensed local trust company when acquiring land in Cambodia. 
 
*Readers should note that the contents relating to the laws of Cambodia have been prepared in collaboration with a Cambodia law firm, CSL & Associates.

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+82-2-6200-1725 kiban@jipyong.com

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